When it comes to paying for higher education, many students are finding that they are coming up short when they take a look at their tuition bill. The price of higher education continues to surge, far outpacing the cost of living at many institutions.
Lately, college students have received some good news when it was revealed that the interest rates for various college lending options has actually dropped. For example, the federal student loan program, called Stafford Loans, is leading the way by dropping from 6.8% to 6% effective July 1st for their subsidized loans, a particular type of loan available for all students, but often favored by those with a low-income.
Over the next three years subsidized Stafford loan rates will continue to drop until they bottom out at a rate of 3.4%. These rates apply to newly written loans, but not for loans previously issued. Unsubsidized student loans will continue to carry the 6.8% rate.
Students who have already completed their education and are in the process of paying off their student loans have received some welcome news too. Specifically, those students with federally guaranteed student loans issued before July 2007 are learning that now is an excellent time to consider consolidating their loans under the government’s Direct Loan program.
If former students consolidate their loans before the next rate change kicks in, they’ll pay a fixed rate of just 4.2% for the life of the loan. This is down significantly from the most recent 7.2% figure thanks to rate cuts made the Federal Reserve Bank over the past year.
Grads who fail to take action will continue to see their rates adjusted annually, depending on market conditions. Clearly, for people who want to get a handle on their debt, consolidating now makes sense.
For students taking out private student loans, there is good news for them too. Annual borrowing limits have been raised to $45,000 and rates with various lenders remains competitive. Just as they are with Stafford Loans, payments are deferred until after you graduate, allowing you to concentrate on getting good grades and finding the right job.
Lastly, the amount of money qualifying students can get from a Pell Grant for the coming school year has been raised to $4731, a $421 boost over the previous year. Federal Pell Grants are based on a family’s financial need and because they are a grant, the monies are not paid back.
Yes, the cost of getting a higher education continues to rise, but thanks to changing market conditions loan plans and other assistance options is making college more affordable for millions of Americans.
